Stock markets to reopen today

NEW YORK - Major U.S. stock exchanges are scheduled to reopen today after Sandy, the worst storm to hit New York in nearly 75?years, closed trading for two days.

NEW YORK — Major U.S. stock exchanges are scheduled to reopen today after Sandy, the worst storm to hit New York in nearly 75?years, closed trading for two days.

The closing — the first in 27?years because of weather — not only was expected to have cost banks and exchanges tens of millions of dollars, but also the lack of a backup plan is viewed by some as a blot on the exchanges’ reputations.

The New York Stock Exchange is scheduled to open, although it could switch to fully electronic trading if necessary. The Nasdaq Stock Market also will be operating today.

U.S. exchanges originally had planned to open markets on Monday, but they eventually responded to pressure from firms worried about employee safety, as well as the inability to see markets effectively function at light staffing.

Banks, brokers and others conferred for hours yesterday about the feasibility of resuming trade. The storm was expected to result in tens of millions of dollars a day in lost revenue for exchanges and banks, analysts said.

After two days of shutdown that occurred during the busy corporate earnings season and at the end of the fiscal year for certain funds, trading is likely to be volatile.

“At least in the early trade, I expect an overreaction regardless of the direction. I expect to see a lot of volume at least in the first hour,” said Art Hogan, managing director of Lazard Capital Markets in New York.

The NYSE, which accounts for about a quarter of U.S. stock market trading volume, is testing the possibility of routing trades through its electronic platform, said Larry Leibowitz, chief operating officer of the NYSE. Under normal conditions it handles about half its volume through its trading floor at 11 Wall Street, where traders and specialists buy and sell stocks in person.

“(Today) will not be without hiccups but will be good enough that the market will be fine,” he said.

The NYSE had said on Sunday afternoon that it planned to close its trading floor and move all trading to its electronic market. It backtracked on that idea after traders and regulators expressed concern — given the difficulties and low staffing levels because of the storm — about moving everything to the all-electronic venue, a plan tested on March 31 but never used live.

The reputation of the NYSE will suffer after it failed to have a backup facility to deal with superstorm Sandy, Arthur Levitt, former chairman of the Securities & Exchange Commission, said yesterday.

“People look to the New York Stock Exchange as being the symbol of American capitalism, and to see the exchange go down for two days without an adequate backup plan is very, very unfortunate,” Levitt said on a Bloomberg Radio interview. “To see the New York Stock Exchange crippled is a body blow that will really shake the image of that institution for a long time to come.

“If you’re going to have a stock exchange, it should have a backup facility of some sort so that regional events don’t cause its closure,” said Levitt, who is a Bloomberg LP board member and an adviser to Goldman Sachs Group Inc. “This should not happen to the world’s most-prominent exchange."

Plans to resume trading will be complicated by the lingering effect of the storm on New York. Sandy brought a record storm surge that flooded subway tunnels, and subway service is not likely to resume for four to five days, Mayor Michael Bloomberg said yesterday.

JPMorgan Chase & Co. expects many employees will be able to return to buildings starting today, according to an internal memo obtained by Reuters.